Concern that local staff, suppliers may lose out if Proton taken over by China firm

Source: Bernama

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KUALA LUMPUR, 14 Feb 2017:

An economist has expressed concern over the impact of the sale of Proton Holdings Bhd’s majority stake to a foreign strategic partner (FSP) on local labour at its Tanjung Malim plant.

Dr Jorah Ramlan of Ramlan PointOn Consultus Sdn Bhd said if the Tanjung Malim production plant were to be beefed up to cater for export markets in the Asian region, it would be an astounding move.

“It would increase employment in our country, as it is easier to employ locals than foreigners.

“If the foreign partner decides they would rather have the production plant in their country, or separate the business; maintaining the plant here but also having another in their country – that would affect our employment rate.”

However, she said these circumstances were all probabilities and a definite answer (on the FSP) would be announced by Proton tomorrow.

“These are all ifs, if you have an Asian partner, they might have it (production plant) in their country because the labour force is cheaper there.

“If it’s European, it is very unlikely to have a production plant in Europe because of the high wages, (even now) they are moving out of their country in search of cheaper labour,” she told reporters on the sidelines of the Malaysian Economic Association Forum on Economic Governance in the Public Sector Governance, here yesterday.

Regardless of which partner, Jorah said the investments would benefit Proton.

On the structure of the workforce, she said it might or might not change as it was up to the FSP and whether the it was included in the terms and conditions of the contract agreement.

“If they were already stated that this will remain as it is, there is nothing for us to be concerned about.”

In terms of job security, Jorah hoped the terms and conditions of the agreement between Proton and its FSP would salvage about 60,000 jobs.

“I hope there is somewhere in the contract saying that you are not allowed to lay off workers or to downsize because that is important to protect the workers.”

Jorah said there was an indirect correlation between labour and economic security as cutting jobs would cause a ripple effect on how Malaysia was going to increase consumption within the economy.

On a suggestion that the FSP should keep the Tanjung Malim’s production facilities rather than the Proton brand, she said a brand name could be changed – but it boiled down whether changing it was allowed in the contract agreement.

The Proton brand is known only in Malaysia and certain countries in Asia, and even though it has been exported to the UK and Middle East, the amount is very small, she said.

She described Proton’s plan to secure a FSP as a very good move from the business perspective as Malaysia always welcomed foreign investments.

She cited New Zealand as an example where many businesses, including banks were owned by Australians.

“Whether they (Proton) choose a partner from an Asian or European country, it would not make a difference in the technology as in Malaysia, we have a lot of foreign cars, particularly Japanese and European cars.”

She said European countries had clear cut rules in terms of doing business and were very transparent in what they could or could not do, unlike a newly industrialised Asian country like China.

“I believe they (China) are trying to standardise but they are still very new. There is always the tendency they might revise certain rules, if it’s done in their country, we can’t say anything. But if it is in Malaysia, it’s our regulations, we can dictate how what we expect from the investors.

“I hope they have all the terms and conditions in place, before deciding to go with FSP, we must have very clear rules or contract. What is it that you want and don’t want to happen.”

Separately, Dr Zarinah Yusof of University of Malaya’s Faculty of Economics and Administration said a Chinese automaker has a strong potential to become Proton’s FSP – owing to China’s strong economy and its vast market.

The senior lecturer said China has a massive market access and a strong consumer purchasing power due a huge surge in its middle and upper-income classes, making it the best choice for a FSP.

“With its economic advancement, China is willing to offer good technology (to Malaysia). So, it is not impossible for China to become a foreign strategic partner to Proton.”

Zarinah said China has a broad consumer base and this would benefit Proton in its quest to expand into the Chinese market, as well as for the Chinese FSP to leverage its sales success particularly in the Asean region.

She said Proton would also have a competitive advantage in terms of the exchange rate in China.

“If we were to look at China, the exchange rate (of renminbi) is more stable (compared with the US dollar and euro), thus giving higher value to Malaysia’s investment.”